Estimating thee Value of New Generation Internet Based Applications in India

Abstract

The current study is a departure from previous research, as it attempts to measure growth elasticity based on Internet usage and not Internet penetration. We feel this is a refinement in the approach to measure impacts given that subscriptions sometimes do not translate into usage. Thus usage elasticity is conceptually a more accurate estimate of the growth dividend, although it also requires more precise data on usage patterns. In this study, we measure Internet usage elasticity for India using an instrumental variable regression on a panel data set of 19 Indian states. We also do a similar exercise for 23 countries in order to draw international comparisons with the Indian estimates. The growth coefficients of usage, a first for India, are a starting point to understand the magnitude of the growth impact of app-based usage.